Topic: does moneypack to paypal raise red flags? (Read 1604 times)

Nobody can answer that exact question.  The IRS can do just about anything it wants.  Then again the IRS has roughly 700 million tax returns (resident, foreign, business, trusts, etc) to process and verify every year.  Plus they need to track down tens of millions of delinquent tax payers owning trillions of dollars collectively.  Add to that the filing and responding to hundreds of thousands of lawsuits each year and you can imagine they got a lot to do.

The simple solution is to just pay the taxes.  Not sure what you are doing (and honestly I don't want to know, seriously) but the IRS doesn't care if your business is unlawful as long as you pay your "fair" share.

Still in all honesty your $30,000 per year is "chump change".  I mean if your marginal tax rate is 15% we are talking about $4,500 in additional taxes.  If you make less than $100K per year the odds of you being a target of an audit (due to return being flagged) is essentially 0%.  Now in addition to targeted audits the IRS does randomly audit about 1% of all tax returns.  If you are audited due to bad luck in theory they could pull your PayPal (and other financial) records and ask you to explain.

Simple version:
The lower your income the less likely the IRS is going to look.  You don't have as much ability to pay, you likely have less assets they can use as leverage, and the amount you can evade is directly related to your income.  Catching one $10 mill tax evader has a higher ROI% than trying to track down 2,000 people who evaded $5,000 in taxes.

Personally I would be hesitant to store large amount of money than, let say about 500 USD on Paypal, as there been plenty of incidents where Paypal locks down a account due to suspected fraud (large fundraisers have especially suffered from this at times), and it can take months to resolve. I'm not familiar enough with IRS, but tax evasion is serious business.

I see.   I had responded to that here:


I would bet they have better things to do than analyze people's PayPal balance.   If they have some other reason that might make them interested in your financial position, then a large PayPal balance might increase their motivation to look closer.  I don't think too many people use PayPal as a place to store lots of funds, so maybe a large account does stick out.  Most people use PayPal to transfer funds to and from their bank account, or for spending.

A red flag where?

If Green Dot and PayPal do not see as problematic loading $4K / month then there's nothing problematic with sending $2.5K either.

But will the IRS still have visibility to it?  Making an educated guess here but, then yes - absolutely they do.  Even $1 / month they can know of it or already do know it when it happens.

Do you plan to spend this on your PayPal either with a PayPal debit card or for PayPal person-to-person transfers?  Because you can't withdraw those funds deposited with MoneyPak using your debit card at an ATM.


PayPal allows $4K per-month (max) after you've verified your PayPal account.

There are no problems with giving or receiving gifts even for that amount.

There doesn't appear to be anything that PayPal or Green Dot would have a problem with as far as I can tell.   

As far as what the IRS does with bank / financial transactions for trying to suss out leads as to who isn't reporting income, I have no idea.  To be clear, Green Dot is now a "bank holding company regulated by the Board of Governors of the Federal Reserve System".  Make no mistake, every MoneyPak transfer is tracked from where it was bought to where it was redeemed (and identity of the merchant or person that redeemed it).  And the IRS has complete access to this tracking information.

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